The Man Steering Pakistan’s Economy Isn’t Afraid to Take Risks

Asad Umar’s expertise in hazardous materials should come in handy for his new job: managing Pakistan’s economy.

When the nation’s new finance minister was told two decades ago he couldn’t import chemicals through a Karachi port because of its storage terminal’s weak safety standards, he just went and built a new unit himself. Back then, he was a senior official at Engro Corp., where he eventually worked his way up the ranks to chief executive officer and turned the company from largely a fertilizer maker into one of the nation’s biggest conglomerates.

Asad Umar Photographer: Asad Zaidi/Bloomberg

Shamsuddin Shaikh, who heads up Engro’s energy arm and worked for Umar for almost 18 years, says the storage unit shows how his former boss was willing to find unconventional approaches to meet challenges. He “reaches to the bottom of the problem” and has an attention to detail, skills that make the 57 year-old right for the job, Shaikh said.

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In his new role, Umar has no shortage of problems to fix. A borrowing binge has left the South Asian nation in need of a bailout of more than $12 billion, he said in an interview last month. Most analysts expect new Prime Minister Imran Khan, the former cricket legend, will soon be knocking on the door of the International Monetary Fund once again.

Foreign-currency reserves have plunged by a third to $9.9 billion in the past year, while the nation is running twin deficits of more than 5 percent of gross domestic product on both its current account and budget. Authorities have devalued the rupee four times since December.

“What needs to be done should be done in the next few weeks,” Umar said in an interview in Islamabad just before his official appointment in August. “They should have been done six months back.”

Beyond the immediate crisis, Umar must also try to fix decades of economic boom-and-bust cycles, an over-reliance on debt-funding and income tax avoidance in a country where less than 1 percent of its more than 200 million people file returns. At the same time, he has to deliver on the prime minister’s pledge to boost welfare spending.

Umar wants to quickly get the business and investment community on side. One of his first steps since taking office was to set up advisory councils reporting directly to the prime minister where firms and economists can provide their input on policies. But that’s already run into controversy after pressure from religious conservatives forced a prominent economist from a Muslim minority sect to resign from one of the councils last week. Umar has faced criticism for staying silent on the issue.

The “government will have to walk a tightrope as it plans to increase development and social spending,” said Asif Khan, the Dubai-based chief financial officer of consultancy Delta Partners and no relation to Imran Khan. “All of this will clash with the need to further tighten monetary and fiscal policies to reduce economic vulnerabilities.”

Umar isn’t scared of taking risks. After becoming head of Engro in 2004, he diversified the company into the dairy business, an industry that was until then dominated by global giant Nestle SA. The move helped turn Engro into one of the nation’s biggest companies with a market value that’s now more than eight times larger.

His leadership wasn’t without fault: Engro was fined by Pakistan’s antitrust agency five years ago for excessively jacking up fertilizer prices. Umar also faced pressure from investors in 2011 when a newly-built fertilizer plant experienced gas shortages despite government supply guarantees.

The finance minister comes from a military family, his father having been a general during Bangladesh’s independence war with Pakistan in 1971. After an early forced retirement, the family moved from the garrison city of Rawalpindi to Karachi, where Umar was educated at public schools.

Zubair, 62, recalls his younger brother was more interested in playing cricket and badminton than studying for exams, yet still managed to get the same good grades as his more studious siblings.

Today, the two brothers are split along political lines. Umar left Engro and joined Khan’s Movement for Justice in 2012 after the former cricket star tried multiple times to get him to join. Zubair joined the party led by former Prime Minister Nawaz Sharif the same year and was a minister in his government. The brothers have clashed in public often, but remain on speaking terms.

The new government will likely have a short honeymoon before difficult economic reforms need to be taken.

Omer Yusuf Photographer: Asim Hafeez/Bloomberg

“It’s going to be tough,’’ said Omer Yusuf, managing director of Lyra Pvt Ltd., a body armor factory in northern Karachi, who knew Umar during his corporate days. “But they’ve got a good team, Asad Umar is probably one of the most brilliant people I know — I’m hopeful.’’

-With assistance by Kamran Haider

(This news/article originally appeared in Bloomberg on September 13th, 2018)